Currency Forecast, August 14th 2013

We have seen the expected USD move, especially in the USDJPY and USDCHF. I took profit in the USDJPY, as 135 pips for each trade (the position was 2 sizes) is not that bad at all. Instead of it, I sold tiny the EURJPY and EURCHF, as I think both currency pairs are a bit overbought and the last move was a result of stop hunting.

I still like the EURUSD and USDCHF positions though, as I expect a lower EURUSD and would see the currency pair trading around 1,3150 at the end of the month.

Also Gold moved in the right direction and it should further decline towards the 1300,00 level soon. Once we see it trading below 1300,00 I will set a stop profit order at 1310,00 for info.

USDJPY was also pushed by worse than expected economic data out of Japan and a slowdown of the economy in China. As a better number again could move the USDJPY back to old levels, I wanted to take profit there and wait now for better entry levels again.

I would also expect first profit taker in the market in USDJPY, EURJPY and EURCHF. That’s why especially the EURCHF position could be a short lived one and I may close it again, should we see spot around 1,2370 within the next few hours.

From the options side: If you traded like I mentioned last time and you sold a high strike in EURUSD, I would close maybe half of the position. With that profit you should be fine, even the EURUSD would turn around because of unexpected reasons.

If you traded the gold option (selling the high strike), I would sit on it and wait until we see a level below 1300,00 to close maybe half of the position.

Good luck,

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Current trades, positions and levels:

For info how the model works: The P/L is always calculated with the size of 1. So if the position is 1 and it makes a profit of 100 pips, the P/L would be +100 pips. If the position is 2 and it makes a profit of 100 pips, the P/L would be +200 pips of course – it is always calculated with the position size of 1. The position could go up to 3, in case the system has a strong view.

Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.

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